Business Model Innovation Case
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Business Model Innovation Case
Introduction
A business model is essential in every company as it performs two significant roles: value capture and creation. Business model innovation is the art of enhancing value creation and advantage, which aims to change the organization’s value proposition to customers. The business model being innovated is mainly designed to be better as compared to the operating model. Therefore business model innovation is the change of an existing model in an organization with another model that is believed to be better as t satisfies the needs of the customers more effectively. Business model innovation does not necessarily mean coming up with new concepts, using new technology or new product, but developing old concepts that are better. Business models can revolutionalize a whole industry, which means that they are a critical part of the company and industry. For a business model innovation’s success, there needs to be a clear concept to avoid abstraction.
Types of Business model Innovation
The different types of business model innovation include product innovation. This is the creation of a new product that does not exist in the market. It can also be defined as improving the features of an existing product already in the market place. For this type of innovation, the product goes through several stages in its life: market research, product development, feasibility study, introduction, growth, and finally, death (Lindgardt et al. 2009). An example of a company that uses this type of business innovation model is Apple, whereby each year, it produces a new type of phone in the market with better features than the last model. The company does not introduce a completely new product, but rather it adds more features that are, it improves the features of existing products.
Another type of business innovation model is service innovation, whereby a company comes up with a new type of service to be offered or comes up with ways of improving existing services. Adopting a service innovation model can benefit the company in different ways. The technology, cost structure, delivery system, and service offerings may be improved due to service innovation, and thereby the organization may attract more customers. One of the companies
Process innovation a type of business innovation model is one that involves coming up with a new or an improved delivery or production method. Process innovation can increase value to various companies’ stakeholders, including employees, customers, the organization itself, and other business partners. Some of the benefits of adopting a process innovation model include reducing the time it takes to produce a product or perform a service, increasing the number of products to be produced, and reducing the business’s costs. Ford Company is an example of a company that uses this model. Management innovation is also a model that can be classified under the business innovation model (Geissdoerfer, Vladimirova & Evans, 2018). It involves implementing new management practices, structures, and processes that are different from the organization’s current norms. One of the companies that have used this model is the Toyota Company.
Open innovation is a type of business innovation model where purposive outflows and inflows are used to quicken internal innovation and expand external markets. Once the company de4cides to use open innovation, the organization’s boundaries become permeable in that it allows the company to combine resources with other organizations. One of the companies that have used this model is Kentucky Fried Chicken, which deals with its operations globally. Value innovation is the last type of business innovation model, which involves creating value for products, which is done through product differentiation and low cost. Value innovation is mainly achieved when the whole system of cost, price, and utility is aligned in that all of the factors are achieved. One of the companies that have used this model is Philips Company.
Challenges of Business Model Innovation
Some of the challenges of the business innovation model include disruptive technologies. Due to the frequent changes in technology, some business models may be overtaken and rendered useless, very fats after being implemented in the company. Also, the changing consumer preferences are a challenge since consumers’ tastes and preferences may change abruptly, which may make an organization incur losses if the change is not in favor of an organization (França et al., .2017). Also, the changing presences make firms have continuous pressure on the business models since they have to keep up with the changing market demand. Also, a business may lack enough resources required to implement a model since most of these changes require a lot of capital.
Conclusion
The business innovation model is the art of enhancing value creation and advantage, which is aimed at changing the organization’s value proposition to customers. The different types of business innovation models include product innovation whereby a new product is developed or an improvement of an existing product in the market. Service innovation is similar to product innovation, where a service is developed or improved. Open innovation involves a company opening its boundaries and trading globally. Value innovation entails creating value, where then the cost is reduced and, at the same time, the price and utility. Some of the challenges of business model innovation are the lack of resources of a company required in the implementation of the models. Also, the rapid change in consumer tastes and preferences and disruptive technologies is a challenge.
References
Lindgardt, Z., Reeves, M., Stalk, G., & Deimler, M. S. (2009). Business model innovation. When the Game Gets Tough, Change the Game, The Boston Consulting Group, Boston, MA.
Geissdoerfer, M., Vladimirova, D., & Evans, S. (2018). Sustainable business model innovation: A review. Journal of cleaner production, 198, 401-416.
França, C. L., Broman, G., Robert, K. H., Basile, G., & Trygg, L. (2017). An approach to business model innovation and design for sustainable strategic development. Journal of Cleaner Production, 140, 155-166.